Wednesday, January 05, 2022

USMCA ruling claimed as victory by both USA and Canada

In the first first dispute settlement case under the new revised North American Free Trade Agreement - or the United States Mexico Canada Agreement (USMCA), as we now have to call it - the panel has ruled that Canada's current dairy supply-management system contravenes the rules of the Agreement, and that it has just 45 days to do something about it.

More specifically, it ruled that Canada can no longer reserve preferential access exclusively for Canadian processors (milk, cheese, yogurt and ice cream makers), otherwise known as "tariff-rate quotas", or TRQ if you want yet another acronym. This will have the effect of lowering duties on many dairy imports and opening up the Canadian market more to American competition.

American trade negotiators, of course, are hailing this as a major victory for the US. Their Trade Representative's statement reads, "This historic win will help eliminate unjustified trade restrictions on American dairy products, and will ensure that the U.S. dairy industry and its workers get the full benefit of the USMCA to market and sell U.S. products to Canadian consumers". And it certainly seems that way at first glance.

The Canadian Trade Minister, though, and Prime Minister Justin Trudeau, choose to see it in quite a different light, magically seizing victory from the jaws of defeat. The Canadian version is that this was at least a partial victory for Canada, because the USMCA panel did not dispute the supply-management system itself, and it declined to rule on some additional complaints that the US brought: "We are pleased with the dispute settlement panel's report, which ruled overwhelmingly in favour of Canada and its dairy industry. In particular, it's important to note that the panel expressly recognizes the legitimacy of Canada's supply-management system."

It's difficult to believe that two such widely disparate interpretations could be placed on the same ruling. All it really comes down to is politics, of course, in its guise as "the art of the possible". Canada is basically breathing a sigh of relief that the ruling did not go any worse than it did, but couching it in as positive a way as possible; the USA, as is its wont, is beating its own drum, and claiming a complete victory out of a partial one. Neither is being completely ingenuous or completely honest. But, hey, that's politics.

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